On Tuesday, shareholders of Petrokazakhstan Inc approved a takeover bid from the China National Petroleum Corporation.
In a joint venture with the L N Mittal group, Oil and Natural Gas Corporation of India's international arm, ONGC Videsh, had also bid for Petrokazakh.
CNPC's winning bid saw Petroleum Minister Mani Shankar Aiyar accuse consultants Goldman Sachs, who had been managing the bids, of foul play in an interview to The Financial Times on Monday.
If you are wondering just why an oil company in Central Asia is so important for Asian giants China and India, read on.
What is Petrokazakhstan Inc?
It is a Canada-based company that operates only in Kazakhstan. In 1996, the Canadian company acquired oil resources in the country bordering China. Petrokazakhstan accounts for about 12 per cent of oil production in Kazakhstan and is that country's third largest oil producer.
How can a Canadian company own oil assets in Kazakhstan?
At that time, fresh from the wounds of the disintegration of the USSR, Kazakhstan was offering big incentives for foreign investors. But now, it wants control over its natural resources.
On October 12, the Kazakh parliament's lower House passed a bill allowing State intervention in the sale of foreign stakes in oil firms.
Why are India and China so keen on acquiring Petrokazakh?
The answer, my friend, is floating in the oil.
Both the Asian giants need oil to fuel their big growth dreams.
India buys 70 per cent of its crude oil and China is the second-largest importer of oil, behind the United States.
And from Sudan to Siberia, the Asians are battling for stakes in oil firms.
If India and China want oil, why are they looking at Central Asia?
That's because oil reserves in Gulf countries are out of bounds for foreigners and the Western countries are fiercely possessive about their oil reserves.
For instance, the US Congress has been blocking a Chinese firm, Cnooc, from taking over Unocal, an American oil company.
So, Central Asia and Africa are the new battlegrounds for the adolescent giants.
What was India's problem with the Petrokazakh bidding process?
According to Petroleum Minister Aiyar, the ONGC-Mittal combine was ahead of CNPC in the first round of bidding. The Chinese company was allowed to re-bid. But before the Indian joint venture could re-bid too, the sale was announced.
So, has CNPC taken over Petrokazakh?
Not yet. Russian oil company Lukoil claims that since it has an existing project/venture in Kazakh it has first right of refusal. The matter is in court.
ONGC's hope of taking over Petrokazakh is over then. Right?
Not quite. India is hoping that the Kazakh parliament will enact a legislation soon allowing the Kazakh government to interfere in the sale of oil assets to foreign companies. And, ONGC is hoping its partner L N Mittal's clout with the Kazakh government -- he has set up steel plants there -- will help its cause when Petrokazakh is revamped according to the new law. However, some reports have suggested that India has lost interest in Petrokazakh because the price is too high.